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INVESTIGATION OF PAPER PRICES 
PROCEEDINGS 

IN THE 

UNITED STATES SENATE 

SIXTY-FOURTH CONGRESS 

ON 

S. RES. 269 

|A RESOLUTION DIRECTING THE FEDERAL TRADE COMMISSION TO 
INVESTIGATE THE INCREASE IN THE PRICES OF THE VARI- 
OUS KINDS. OF PAPER REQUIRED FOR PRINTING AND 
BINDING DURING THE LAST YEAR, 

TOGETHER WITH 

THE CORRESPONDENCE OF THE 

JOINT COMMITTEE ON PRINTING 

IN RELATION THERETO 



Printed for the use of the Joint Committee on Printing. 




WASHINGTON 
GOVERNMENT PRINTING OFFICE 

lfalS 






CONGRESS OF THE UNITED STATES. 

Joint Committee on Printing. 

DUNCAN U. FLETCHER, Senator from Florida, Chairman. 
WILLIAM E. CHILTON, Senator from West Virginia. 
REED SMOOT, Senator from Utah. 
HENRY A. BARNHART, Representative from Indiana. 
CLYDE H. TAVENNER, Representative from Illinois. 
EDGAR R. KIESS, Representative from Pennsylvania. 
George H. Carter, Clerk. 



D. of D. 
fAN 13 1917 



A 



[Sixty-fourth Congress, first session.] 

S. RES. 269 



In the Senate of the United States. 

September 7, 1916. 

Mr. Fletcher submitted the following resolution; which was considered and 

agreed to. 



RESOLUTION. 

Resolved, That the Federal Trade Commission be, and the same 
is hereby, directed to investigate the increase in . the prices of the 
various kinds of paper required for printing and binding during the 
last year, and to ascertain and report, at as early a date as practi- 
cable, whether there have been any violations of the antitrust acts by 
any corporation in connection with such advance in prices, with 
special reference to the prices demanded for paper necessary for the 
public printing and binding, and also whether or not the paper so 
used was manufactured in the United States or imported from the 
Dominion of Canada. 

3 



PROCEEDINGS IN THE SENATE. 

THURSDAY, SEPTEMBER 7, 1916. 
PRICES OF PAPER. 

Mr. Fletcher. I wish to offer a resolution. 

Mr. President, I have here a letter from the Public Printer of this 
date, which shows that he has been able to get only one bid on 310,000 
pounds of machine-finish printing paper, and that bid from a broker, 
at 11 cents per pound, or a total of $34,100 for the lot. I ask to 
have the letter printed in the Eecord as a part of my remarks. 

Last year the same paper was furnished the Government Printing 
Office under contract at 3.75 cents per pound. This shows an in- 
creased price of 7.25 cents per pound, or nearly three times the 
amount paid last year. The total increase on the 310,000 pounds 
amounts to $22,475. 

Another bid for only 1,000 reams of the same lot of paper is for 
7.9 cents per pound, or almost double that paid last year. 

For several months past the Public Printer has not been able to 
obtain any real competition whatever in his open-market purchases 
of paper required for the public printing and binding. Even for 
those items that he has under contract, some contractors are now 
refusing to deliver in excess of the estimated quantities, though the 
Attorney General has held that their contracts obligate them to 
deliver such quantities as may be required for the public printing 
and binding during the year. The Solicitor of the Treasury has 
been requested to bring suit against such defaulting contractors, but 
these suits can not procure paper that is now needed to continue the 
work of printing the necessary records of the Government. Whether 
there is collusion among the paper manufacturers and dealers to 
limit the competition and increase the price for paper required by 
the Government, I am not prepared to state, but the circumstances 
are sufficiently suspicious to warrant a special investigation of the 
matter. The resolution adopted by the Senate on April 24, 1916, 
applies only to an investigation of the price of news print paper. 
That investigation has been about completed by the Trade Commis- 
sion. I believe that the information called for by this resolution 
will be of great service to the Government, especially as the Joint 
Committee on Printing will soon be called upon to invite proposals 
and award contracts for furnishing paper for the public printing 
and binding for the^ year beginning March 1, 1917. These proposals 
are usually submitted in January and the contracts awarded about 
the 1st of February of each year. 

I offer the resolution and ask unanimous consent for its present 
consideration. 

5 



6 INVESTIGATION OF PAPER PRICES. 

Mr. Gallinger. Let it be read and see what it is. 

Mr. Smoot. Let the resolution be read. 

The Secretary read the resolution (S. Ees. 269), as follows: 

Resolved, That the Federal Trade Commission be, and the same is hereby, 
directed to investigate the increase in the prices of the various kinds of paper 
required for printing and binding during the last year, and to ascertain and 
report at as early a date as practicable whether there have been any violations 
of the antitrust acts by any corporation in connection with such advance in 
prices, with special reference to the prices demanded for paper necessary for the 
public printing and binding. 

Mr. Smoot. Mr. President- 



Mr. Fall. Mr. President, if the resolution is going to lead to de- 
bate I must object to its consideration at this time. 

Mr. Fletcher. I do not think it will be debated. 

Mr. Gallinger. Will the Senator from Florida object to adding 
the words " and also whether or not the paper so used was manufac- 
tured in the United States or imported from the Dominion of 
Canada " ? 

Mr. Fletcher. I have no objection to that amendment. 

Mr. Gallinger. I move that amendment. 

The amendment was agreed to. 

Mr. Smoot. I will say to the Senator from New Mexico that I shall 
not occupy the time of the Senate more than two minutes. I simply 
want to call the attention of the Senate at this time to one or two 
facts. 

I have not any doubt but that there has been inserted into the 
Record to-day without reading articles that will cost the Govern- 
ment of the "United States between $5,000 and $7,000. It is a 
practice that we have tried to stop in the past, and I do not know 
when it will ever be stopped. 

But there is a more serious situation than that. To-day the 
Government Printing Office has not enough paper on hand, if we 
were going to stay in session, to print the Record more than about 
30 days. We generally have about six months' supply of paper on 
hand, bat to-day it has run down to the very lowest ebb and we are 
compelled to buy the paper now at three times the ordinary price. 
A great deal of it comes about by Senators putting in the Record 
editorials, articles in magazines, and everything they can gather 
together that they have an idea the public want to read. 

I hope that the resolution will be passed. 

Mr. Fletcher. Mr. President, I think there is a great deal of 
unnecessary matter going into the Record, but, at any rate, this 
investigation, I think, will clear up the situation somewhat. It has 
been exceedingly difficult to get more than one bid for furnishing 
certain varieties of paper to the Government Printing Office, al- 
though 30 concerns were invited to bid. I ask for the adoption of 
the resolution. 

The Presiding Officer (Mr. Shafroth in the chair). The ques- 
tion is on agreeing to the resolution as amended.- 

The resolution as amended was agreed to. 

Mr. Fletcher. I ask unanimous consent to have printed as part of 
my remarks the letter which I send to the desk. 

The Presiding Officer. Without objection, it is so ordered. 



INVESTIGATION OF PAPEE PRICES. 7 

The letter referred to is as follows: 

Office of the Public Printer, 

Washington, September 7, 1916. 

Sir: There is required for use in the Government Printing Office 152,000 
pounds machine-finish printing paper, No. 1, white, 24 by 38 inches, 38 pounds ; 
76,000 pounds machine-finish printing paper, No. 1, white, 38 by 48 inches, 76 
pounds; 48,000 pounds machine-finish printing paper, No. 1, white, 24 by 3S 
inches, 48 pounds ; and 34,000 pounds machine-finish printing paper, No. 1, 
white. 24 by 32 inches, 34 pounds, for the purchase of which an invitation to 
bid on the specifications was issued, under date of August 24, to about 30 
concerns interested in the manufacture or sale of paper of this description, 
with the result that only two bids were received, one of which covered all of 
the various lots described at a price of $0.11 per pound, the quotation being 
limited to acceptance within six days from September 5 ; the other bid covered 
one item only of 1,000 reams of 24 by 38 inches, 48 pounds, at a price of $3,792 
per ream. Both prices were based upon samples submitted by each bidder. 

In view of the fruitless effort to interest manufacturers of paper in sub- 
mitting quotations for Government requirements, I feel that the situation is 
imperative enough to request that some action be taken whereby the Govern- 
ment will be enabled to purchase paper for public printing and binding work 
at a reasonable price, and in the meantime I respectfully request authority 
to purchase the 1,000 reams of 24 by 38 inches, 48 pounds, machine-finish 
printing paper, at the price of $3,792 per ream, and if the price of $0.11 per 
pound for the other items of machine-finish printing paper hereinabove de- 
scribed is acceptable that you authorize and direct the purchase. 

In the event that you decide to disapprove the purchase of any of the items 
herein described, I respectfully urge that you issue definite instructions direct- 
ing the procedure to be adopted in obtaining the necessary requirements of 
paper for public printing and binding work, as I am without authority to com- 
pel manufacturers of or dealers in paper to submit bids under existing condi- 
tions, and I regard the matter as important enough to justify your most serious 
consideration and prompt action. 

Respectfully, Cornelius Ford, 

Public Printer, 

Chairman Joint Committee on Printing, 
United States Senate, Washington, D. C. 



LETTER FROM CHAIRMAN OF JOINT COMMITTEE ON PRINTING 
TO THE FEDERAL TRADE COMMISSION. 

Congress of the United States, 

Joint Committee on Printing, 

Washington, September 13, 1916. 
Federal Trade Commission, 

Washington, D. C. 

Sirs : In connection with Senate resolution No. 269, directing the 
Federal Trade Commission to investigate the increase in the prices 
of various kinds of paper required for printing and binding, which 
was adopted by the Senate on September 7, 1916, 1 desire to call your 
attention to the remarks on pages 16416-16417 of the Congressional 
Record of that date which I made when I offered the resolution in 
the Senate, and to sumit in addition thereto the following statement 
which may be of service to your commission in conducting the in- 
vestigation as directed by the Senate. 

Shortly after the Joint Committee on Printing had awarded con- 
tracts for paper for the public printing and binding for the year 
beginning March 1, 1916, certain of the contractors began to request 
modifications of their contracts so as to cheapen the quality of paper 
they were required to deliver the Government or to increase the price 
at which they had agreed to furnish paper of the standards required 
by this committee. These contractors represented that there had been 
a sudden and unexpected rise in the cost of raw materials used in the 
manufacture of paper, and that the price of paper, therefore, has 
advanced far beyond their expectations at the time the bids were 
submitted to the committee on January 24, 1916. Within two weeks 
after the contracts became effective the committee received appeals 
for relief from several of the contractors, including the Kalamazoo 
Paper Co., of Kalamazoo, Mich.; Champion Coated Paper Co., of 
Hamilton, Ohio; and the Hawthorne Paper Co., of Kalamazoo, 
Mich. The committee considered these appeals at its meeting on 
March 14, 1916, and the companies were advised at that time that 
the committee could not consent to any changes in the specifications 
or prices to be paid for paper under contracts which had just become 
effective on March 1. 1916. The committee was of the opinion that 
these requests for modifications of the neAY contracts were premature 
inasmuch as no paper had been delivered to the Public Printer under 
the contracts, and consequently the contractors had little or no accu- 
rate information at that time upon which to base their claims of 
possible losses. 

It is interesting to note that upon the same day that the committee 
declined to modify the contracts in the interests of the paper manu- 
facturers the American Pulp and Paper Association sent out a letter 
from New York under date of March 14, 1916, suggesting to the 
contractors that they present a concerted petition to the committee 
requesting that the mills be allowed to furnish paper to the Govern- 
8 



INVESTIGATION OP PAPEE PEICES. 9 

ment at actual cost price instead of at the contract price. A copy or 
this letter, which was signed by A. D. Nay lor, secretary -treasurer of 
the American Pulp & Paper Co., is attached hereto as Exhibit A. 1 

Apparent corroboration of this activity of the American Pulp and 
Paper Association is found in a letter which the committee received 
from the Champion Coated Paper Co., under date of March 16, 
1916, replying to communication from the committee that it had 
decided on March 14 to require paper contractors to comply with 
the terms of their contracts. In this letter the Champion Coated 
Paper Co. says : " We have therefore decided to make a request 
through the American Pulp and Paper Association for the privilege 
of taking this matter up further with your committee." 

The American Pulp and Paper Association, however, never pre- 
sented its proposed petition to the committee, and I have no infor- 
mation as to its further activities in regard thereto or the replies 
which were made to its letter of March 14. It is possible that the 
committee's action of that date may have discouraged any further 
presentation of the matter for the time. 

Several weeks later Mr. H. A. Moses, president of the Strathmore 
Paper Co., of Mittineague, Mass., seems to have become active in 
proposing that the paper contractors present another request to the 
committee for modifications of their contracts. I understand that 
Mr. Moses personally visited a number of mills to urge their coopera- 
tion in this appeal. Under date of May 13, 1916, Mr. Moses wrote 
the committee, requesting a hearing to " representatives of four or 
five mills," that they might present the raw-stock market situation 
for the consideration of the committee. This request was granted 
and the hearing fixed for May' 18, 1916. 

At the hearing on May 18 the following paper contractors were 
present: Mr. H. A. Mcses, president of the Strathmore Paper Co., 
Mittineague, Mass. ; Mr. H. M. Knickerbocker, president of the 
Esleeck Manufacturing Co., Turners Falls, Mass.; Mr. Peter G. 
Tomson, jr., vice president Champion Coated Paper Co., Hamilton, 
Ohio; and Mr. E. P. Andrews, president of the E. P. Andrews 
Paper Co., of Washington, D. C. The committee also had before it 
letters from the following companies in regard to modifications of 
their contracts: Aetna Paper Co., Dayton, Ohio; Hawthorne Paper 
Co., Kalamazoo, Mich.; Kalamazoo Paper Co., Kalamazoo, Mich.; 
Knowlton Bros. Co., Watertown, N. Y. ; Carew Manufacturing Co., 
South Hadley Falls, Mass. No stenographic report was made of 
the hearing, but I attach hereto, as Exhibit B, 2 an extract from the 
minutes of the committee of that date, giving a substantial synopsis 
of the oral statements submitted. 

Subsequently Mr. Moses submitted an additional statement, as 
requested at the hearing, a copy of which is attached hereto as Ex- 
hibit C. 3 Several other contractors also requested reductions in the 
amount of rag stock to be used in the paper furnished the Govern- 
ment, claiming that the scarcity and high price of rags made it either 
impossible for them to comply with the Government's specifications 
or that in so doing they would incur a serious loss. I attach hereto, 
as Exhibit D, 4 copies of telegrams in this connection received from 
the Champion Coated Paper Co. 

1 See page 16 for Exhibit A. 3 See page 18 for Exhibit C. 

2 See page 17 for Exhibit B. 4 See page 18 for Exhibit D. 



10 INVESTIGATION OF PAPER PRICES. 

It may interest you to know that the committee had the previous year 
reduced the quantity of rag required in certain writing papers from 
50 to 25 per cent and in others from 75 to 50 per cent for the year be- 
ginning March 1, 1915, and that this reduction was carried in the 
specifications for the present year. The reductions had been made 
to meet possible increases in the cost of rag stock due to the Euro- 
pean war. In this connection, however, I call your attention to the 
following letter which the committee received from True & McClel- 
land, 127 Federal Street, Boston, Mass., under date of December 23, 
1914: 

We see it announced that your committee has reduced the amount of rag 
paper, owing to the possibility of shortage of rags owing to the European war. 

We beg to advise, as importers of European rags, that this article is a drug 
at the present. We have an abundance, and find much difficulty in selling 
them, because the mills are overstocked. 

This condition is likely to continue. 

This firm may be able to furnish you with information as to 
whether there has been such a shortage of rags as paper manufac- 
turers represent. 

At its meeting on June 5, 1916, the committee finally decided not 
to authorize any modifications in the standard specifications for 
paper to be furnished the Public Printer under existing contracts 
and the Public Printer was notified to require all contractors to 
comply with the terms and conditions of their contracts. This action 
was based largely upon the fact that the contractors had made a 
substantial increase on practically every lot of paper upon which 
they bid for the year beginning March 1, 1916, indicating that they 
must have given consideration at that time to the rise in the cost of 
raw materials. Some of the increases under existing contracts exceed 
50 per cent, such increases being made by two of the companies, the 
Champion Coated Paper Co. and the Strathmore Paper Co., which 
were particularly active in urging that the committee grant them 
additional increases over and above their contract prices. In nu- 
merous instances increases under existing contracts run from 10 to 
20 per cent above the prices paid last year. 

That the bidders must have given some consideration to the in- 
creased cost is also shown by a letter which the committee received 
from the Carew Manufacturing Co., of South Hadley Falls, Mass., 
under date of May 16, 1916, in which that company stated : " We must 
frankly admit that we made our bid in January last with some idea 
at least that prices would rule higher, and we are willing, therefore, 
to take our medicine in spite of the serious condition of affairs." 

The committee also took into consideration a petition filed with 
your commission by the executive committee of the News Print Man- 
ufacturers Association in which that association stated that " about 
85 per cent of the news print manufactured in the United States and 
Canda is sold on annual contracts and these contract prices have not 
increased more than 1 per cent during the past 12 months, and will 
not average any higher than the price at which it was contracted and 
sold during the past 10 years." 

The committee also had a copy of a letter written by the West 
Virginia Pulp & Paper Co., under date of April 4, 1916, stating that 
" We are carrying out and expect to carry out to the letter the con- 
tracts we have, and, in our opinion, other contractors should be 
obligated to do the same." 



INVESTIGATION OF PAPEK PRICES. Li 

The following item from the Paper Trade Journal, of April 20, 
1916, under Kalamazoo, Mich., date of April 15, was also of interest 
In the committee in connection with a letter from the Hawthorne 
Paper Co., under elate of March 14, 1916, stating that it would " sus- 
tain some very serious losses this year on our contract " and asking 
the Government to pay an advance price over and above the contract 
price for paper to be furnished the Public Printer : 

The Hawthorne Paper Co. increases its capital stock from $400,000 to $500,000, 
articles of incorporation at Lansing having been amended to show the change. 
The additional capital will be used to pay for the many improvements that are 
now being made at the mill. The company recently doubled the size of its 
power plant and it is also making many other improvements about the mill. 
Another new machine will soon be added and other necessary equipment in- 
stalled. The Hawthorne Co. is finding it difficult to take care of all of the 
business that is coming its way at the present time. 

In view of the foregoing facts the committee did not feel justified 
in granting any increase to the paper contractors, and it did not, 
therefore, go into the question as to whether it has any authority to 
modify its contracts, of which there may be serious doubt. 

No further appeal has been made to the committee to cheapen the 
quality or increase the price of paper now under contract, but it is 
a significant fact that these companies have refrained from bidding 
on numerous open-market lots of paper since the committee's action 
of June 5. The result has been that the Public Printer has been 
forced to pay whatever noncompetitive price he could obtain for 
paper required to continue the necessary work of the Government 
Printing Office. 

In addition to the apparent resentment over the committee's re- 
fusal to accede to their demands for an increase of contract prices, 
the paper contractors seem to have taken serious exception to an 
opinion which the Attorney General has rendered at the request of 
this committee. That opinion construes the existing contracts as 
requiring the paper contractors to deliver whatever quantity of paper 
may be required for the public printing and binding during the term 
of the contract, regardless of the quantities as estimated in advance 
by the Public Printer. The opinion came about in this way: The 
Republic Bag & Paper Co., of New York City, entered into a con- 
tract to furnish news-print paper to the Government Printing Office 
for a period of six months, beginning March 1, 1916, estimated 
quantity being stated at 300,000 pounds, but the contract providing 
that "the contractor must furnish the quantity which may be needed, 
whether more or less than estimated." On March 24 the Public 
Printer advised the committee that he had already ordered in excess 
of the estimated quantity, and that the Republic Bag & Paper Co. 
declined to deliver any more paper on its contract for the six-month 
period. On April 10 the committee requested the President to ob- 
tain an opinion of the Attorney General construing the contract as 
to the quantity of paper that may be ordered thereunder. On May 
9 an informal opinion was obtained from the Attorney General, a 
copy of which is attached hereto as Exhibit E, 1 and this opinion was 
subsequently made formal by the Attorney General under date of 
June 13, 1916. 

1 See page 20 for Exhibit E. 



12 INVESTIGATION OF PAPER PRICES. 

On May 18 the Champion Coated Paper Co. notified the Public 
Printer that it would not furnish any paper on certain lots in excess 
of the estimated quantities. As a result of this opinion the Cham- 
pion Coated Paper Co. was declared in default of its contract on 
certain lots on June 9 and 10, 1916, and the Republic Bag & Paper 
Co. was declared in default of its contract for news-print paper on 
June 9, 1916. 

There may be some significance in the fact that about the time 
(June 5) that the committee declined to grant paper manufacturers 
an increase in their contract prices two contractors were declared in 
default (June 9) for refusing to furnish paper in such quantities 
as might be ordered by the Public Printer under their contracts as 
construed by the Attorney General. 

I have presented this rather lengthy recital of preliminary events 
that you may determine what influence, if any, they have had on 
subsequent developments. It may be that the paper manufacturers 
and dealers have entered into an agreement, informal or otherwise, 
to refrain from competitive bidding on paper required by the Public 
Printer on account of the Government's attitude toward their pres- 
ent contracts. If such an agreement has been entered into it would 
appear to be a violation of section 2 of the Clayton antitrust act 
which prohibits price discrimination where the effect may be to 
substantially lessen competition or tend to create a monopoly. Of 
this I have no evidence further than the facts as related by the 
Public Printer in his efforts to obtain bids on open-market purchases 
of paper since June 9. 

On June 7 the Public Printer requested open-market proposals on 
36,000 pounds of white machine- finish printing paper. On this 
request he received three proposals, including one from the Champion 
Coated Paper Co., which seems to have been the last proposal sub- 
mitted by that company since it was declared in default on certain 
lots of paper on June 9. The lowest bid on this paper was by the 
Jessup & Moore Co., of Philadelphia, Pa., at 7 cents a pound, the 
same paper having been bought the previous year under contract 
of the Jessup & Moore Co. at 3.49 cents per pound. 

On June 15, 1916, the Public Printer requested open-market pro- 
posals on 220,000 pounds white news print paper and 603,800 pounds 
machine-finish printing paper. The Public Printer stated in his 
letter to the committee, under date of June 27, 1916, that he had 
" circularized and advertised among about 40 mills and dealers in 
papers of these descriptions soliciting quotations for furnishing the 
quantities of paper described," with a result that only one bid was 
received on furnishing the 220,000 pounds news print paper, the 
price quoted being 3.75 cents per pound. On the machine-finish 
printing paper there were four items on which no bids were re- 
ceived, and on three items only one bid was received. None of the 
bids submitted were based on Government standards, all quotations 
being for a quality of paper represented by samples submitted with 
the quotations. The Public Printer further states that "the lack 
of interest on the part of manufacturers and dealers in the invitation 
to bid is suggestive that further efforts will not be productive of 
any better results." The prices quoted on the machine-finish print- 
ing paper range from 6.7 cents to 7.3 cents per pound, while the 



INVESTIGATION OF PAPER PRICES. 13 

same paper was bought under contract the preceding year at from 
3.34 to 3.75 cents per pound. 

Again on June 27, 1916, the Public Printer informed the committee 
that in response to his request of June 15 for open-market purchases 
on 152,000 pounds of white machine- finish printing paper he had 
received only one bid of 8.3 cents per pound. This paper was 
bought under contract last year at 3.74 cents per pound. The Cham- 
pion Coated Paper Co. refused to furnish the paper in excess of 
10,000 pounds under its blanket-lot contract for this year at 4.22 
cents per pound. 

On July 21 the Public Printer requested proposals on 400,000 
pounds of news-print paper. Under date of July 29, 1916, the Public 
Printer advised the committee that "having repeatedly called for 
open-market proposals for this paper in various amounts I have 
either obtained no bids or those which we consider unsatisfactory, 
and as a last resort have called for proposals based on paper which 
might be furnished by the bidder, waiving the specifications for color, 
etc., and as a result of this effort have obtained only one bid from 
Weinstock & Son (Inc.), as per inclosed copy." The accepted order 
of Weinstock & Son was 5£ cents per pound for news-print paper, 
of which the Republic Bag & Paper Co., of New York, had declined 
to furnish additional quantities at its contract price of 3 cents per 
pound. Last year the contract price for the same paper was 2.25 
cents per pound. Weinstock & Son are located in New York City, 
as is the Republic Bag & Paper Co. 

On July 29, 1916, the Public Printer requested open-market pro- 
posals on 400,000 pounds white machine-finish printing paper, sam- 
ples to be submitted by bidder. Under date of August 12, 1916, the 
Public Printer advised the committee that " in a recent effort to ob- 
tain quotations for furnishing this quantity and class of paper only 
one bid was received, the price being 8.3 cents per pound, submitted 
by O. H. Gore." A subsequent quotation was received from the 
New York & Pennsylvania Co., at 7.25 cents per pound, based upon 
acceptance within the week and delivery in October and November. 
This paper was purchased last year under contract at 3.55 cents per 
pound, the contractor being the New York & Pennsylvania Co., of 
New York City. 

On August 24, 1916, the Public Printer invited open-market pro- 
posals on 310,000 pounds of white machine-finish printing paper, 
requesting the bidders to submit samples of their own paper. The 
Public Printer received only one bid on the 310,000 pounds, and that 
from a Washington broker at 11 cents per pound, totaling $34,100. 
The same paper was furnished under contract last year at 3.75 cents 
per pound. Increase asked on this one lot alone amounted to $22,475. 
In his letter to the committee, of September 7, 1916, the Public 
Printer says: 

In view of the fruitless effort to interest manufacturers of paper in submitting 
quotations for Government requirements, I feel that the situation is imperative 
enough to request that some action be taken whereby the Government will be 
enabled to purchase paper for the public printing and binding work at a rea- 
sonable price. 

It was this last observation of the Public Printer that induced me 
to offer the resolution directing your commission to investigate the 



14 INVESTIGATION OF PAPER PEICES. 

increase in the price of paper with special reference to the prices 
demanded for paper necessary for the public printing and binding. 
Whether by prearranged plan or not, it is a fact, as clearly shown 
by the foregoing statements of the Public Printer, that paper manu- 
facturers and dealers are refusing to bid on paper required for the 
public printing and binding. For more than three months now the 
Public Printer has been compelled to rely upon one or two Wash- 
ington jobbers for the supply of paper that he is required to pur- 
chase in the open market. In the last month or two these bids have 
been received from practically only one local jobber. It appears to 
me, therefore, that an investigation ought to be made as to whether 
or not there is discrimination against the Government in the supply 
and prices of paper. 

This seeming discrimination may be directed against the Govern- 
ment Printing Office alone on account of its contractors being re- 
quired to comply with their contracts. It has been stated that other 
establishments of the Government, such as the Post Office Depart- 
ment, the General Supply Committee, arid the Quartermaster Depart- 
ment of the Army, have been somewhat more successful in obtaining 
competitive proposals for furnishing paper required by them. I 
would suggest that inquiry be made of these establishments also to 
determine whether the Government Printing Office has been singled 
out to alone bear the brunt of the exhorbitant and noncompetitive 
prices which paper manufacturers are demanding for their product. 

The Public Printer can furnish detailed information in regard to 
the difficulties he has had in obtaining proposals for paper, and I 
would also suggest that you request him to submit such information 
to your commission. 

I submit herewith as Exhibit F x a copy of the proposal for fur- 
nishing paper for the public printing and binding for the year be- 
ginning March 1, 1916. This proposal shows the classes of paper 
required for the public printing and binding. The Senate resolution, 
as you will observe, directs a special inquiry to be made into the ad- 
vance of prices of such paper. Most of the lots of paper included in 
the proposal are covered by annual contracts for the year beginning 
March 1, 1916, and I submit an abstract of such contracts as Exhibit 
G. 1 A comparison of this abstract with the abstract for the year 
beginning March 1, 1915 (Exhibit H), 1 will show the advance in 
prices on the contract lots. The Public Printer can make a direct 
comparison of these prices and show the percentage of increase in 
each instance if you so desire. 

The greatest increase in prices, however, has been on the open- 
market purchases which the Public Printer has been required to 
make of certain lots of paper, particularly news-print and machine- 
finish printing papers, owing to the default of certain contractors, as 
I have already stated. I presume your present inquiry into the ad- 
vance in the price of news-print paper will cover that particular kind 
of paper sufficiently for the purposes of the investigation I have 
proposed, except possibly as there may appear to be some special dis- 
crimination against the Government in the furnishing of news-print 
paper for its use. 

1 Exhibits not printed. 



INVESTIGATION OF PAPEE PRICES. 15 

Owing to existing contracts, many of which have been complied 
with in good faith by the present contractors, the Public Printer's 
difficulty has been confined chiefly to the purchase of machine-finish 
printing paper which is largely used by the Government Printing 
Office in the printing of the Congressional Record and the vast num- 
ber of congressional and departmental documents and reports. An 
adequate and prompt supply of this paper is absolutely necessary for 
the operation of the Government Printing Office, and of this fact the 
paper manufacturers are well aware. 

The necessity of large open-market purchases of news-print and 
machine-finish printing papers by the Public Printer was brought 
about by the default of three contractors for these items. The de- 
fault of the Republic Bag & Paper Co., of New York, on news-print 
paper has already been related. The National Contracting Co., of, 
New York City, after submitting the lowest bid for furnishing ap- 
proximately 6,000,000 pounds of machine-finish printing paper, failed 
to enter into a contract in accordance with the terms of its proposal. 
Subsequently the Champion Coated Paper Co., of Hamilton, Ohio, re- 
fused to furnish machine-finish printing paper on its two blanket lots 
Nos. 20 and 21 in excess of 100 per cent above the estimated quan- 
tities for such paper. The defaults of these three companies have 
accordingly been reported to the Solicitor of the Treasury, and I 
understand that he is preparing to bring suit against them. Mean- 
while the Public Printer is having the greatest difficulty to obtain 
paper required for the public printing, and according to trade reports 
there dees not appear to be much prospect for a relief from the pres- 
ent high prices. In this connection I quote from the New York 
Market Review, published in the Paper Trade Journal under date of 
August 31, 1916 : 

The general attitude of the trade is that all grades of paper will continue to 
rise in price for some months to come, owing to the great scarcity and the ever- 
increasing demand. 

This situation is of special concern to the Joint Committee on 
Printing in view of the fact that it must award contracts on or before 
February 1, 1917, for paper required for the public printing and 
binding for the year beginning March 1, 1917, and it is especially in 
the interest of the Government that a report be had before that time, 
if possible, as to whether the paper manufacturers are justified in 
maintaining the present high prices and continuing the same. 

In connection with the investigation I presume, of course, that 
you will also look into the complaints of the paper manufacturers 
that they have had to pay excessive prices for wood pulp, rag stock, 
and other raw materials entering into their product. The paper 
manufacturers and jobbers appear to base their increase of prices 
upon the great advance in the cost of these materials due, as they 
assert, to the European war conditions. I notice in the Paper Trade 
Journal of August 31, 1916, that peeled pulp wood is quoted at 
Watertown, N. Y., at $13.50 per cord, and that the general manager 
of the Somerville-Ellsworth Pulp Wood Co., of that city, believes 
the price will go to $15, owing to the shortage in Canada. In the 
same issue of the Paper Trade Journal there is a very interesting 
article relating to pulp- wood opportunities in national forests, in 
which Chief Forester Graves is quoted as stating that the cost of 



16 INVESTIGATION OF PAPER PRICES. 

pulp-wood timber delivered to the mill from the national forests 
would not often be more than $3 per cord. 

Under date of August 3, 1916, the Secretary of Agriculture ad- 
dressed a letter to the President in regard to the print-paper situa- 
tion. In this letter the Secretary of Agriculture makes the interest- 
ing statement that — 

The Forest Service has offered for sale at various times large amounts of 
timber on the national forests in logging chances favorable for pulp operations. 
These areas are located mainly in the Pacific Northwest and in Alaska, and 
offer combinations of suitable and cheap timber with large quantities of easily 
developed water power. Up to the present time it has not been possible to 
make such sales. The chief difficulty has been that the western markets have 
been fully supplied, and, in fact, mill capacity probably has been in excess of 
market demands. 

In view of these statements I believe the advance in the price of 
pulp wood ought to be thoroughly investigated, particularly as the 
Government appears to have pulp wood available, at $3 or less per 
cord, with no bidders, while pulp mills claim that they will soon have 
to pay from $15 to $17 per cord. 

The rag market may also be a fruitful field of inquiry in connection 
with this investigation, as, you know, rags are used largely in the 
manufacture of the higher grades of paper. Paper manufacturers 
have contended for several months that it is impossible for them to 
obtain rags regardless of price. They contend that munition makers 
are now large consumers of rags. On the other hand, the Public 
Printer recently advised the committee that he had been informed 
by the manager of a big munition plant that such plants were using 
only a small quantity of rags in the production of explosives. There 
has been an inclination on the part of some jobbers, paper manufac- 
turers, pulp-mill men, and rag dealers to each charge the other with 
demanding excessive prices and thereby making large profits out of 
the present paper situation. Whether the jobber, the manufacturer, 
or the pulp mills are being enriched at the expense of the others, I 
do not know, but this fact is certain — that the consumers of paper, 
including the Government, have to pay the price. The committee 
was recently informed by a stockholder in a Kalamazoo company — 

the Paper Co., I believe — that he was receiving a dividend of 

$400 a month on $10,000 stock in that company. This tremendous 
profit hardly seems credible, but his statement was made freely and 
in apparent good faith. If such profits are general in the paper 
trade, I believe your investigation will prove of great benefit to the 
public. 

Respectfully, yours, 

Duncan U. Fletcher, 

Chairman. 

EXHIBIT A. 

American Paper & Pulp Association, 

New York, March 14, 1916. 



Gentlemen : When the general Printing Office schedule was bid on in Jan- 
uary no one could foi-esee absolutely the conditions that have arisen. 

It is pretty certain that most of those who have bid on Government work 
will find themselves unable to fulfill their contracts during the coming year 
except with a loss. 



INVESTIGATION OF PAPEE PEICES. 17 

It has appealed to some of the bidders that a concerted petition might be 
made to the Committee on Printing, which petition made in person before the 
committee would outline the existing conditions, rapidly getting worse, and 
point out that under these conditions a material loss would be put upon the 
mills, and requiring that the mills be allowed to make during such times as 
the present conditions prevail their contracts at actual cost prices to the Gov- 
ernment. 

Would you care to become one of the petitioners? 

Please favor us with a reply so as to reach here not later than Friday 
morning, the 17th, if possible. 

Yours, very truly, A. D. Nayloe, Secretary-Treasurer. 



EXHIBIT B. 

[Extract from minutes of Joint Committee on Printing, May 18, 1916.] 

Mr. Moses made the opening statement to the committee. He said that 
owing to the great increase in the cost of raw materials, due to the European 
war, the paper contractors would suffer the loss of many thousands of dollars 
if required to furnish paper in accordance with contract prices and specifi- 
cations agreed to by them for the year beginning March 1, 1916. He mentioned 
wood pulp, rags, and chemicals as the principal materials used in the manu- 
facture of paper in which prices have greatly increased. If required to carry 
out its contracts, Mr. Moses estimated that the Strathmore Co. would lose 
$9,478 on its contract to furnish wove machine-finish printing paper, $7,376 
on its writing-paper contracts, and $16,889 on its bond-paper contracts. He 
suggested that the paper contractors be permitted to furnish paper to the 
Government during the remainder of the contract year at actual cost, if such 
arrangement were practicable ; or that the committee modify the specifications 
for the various lots of paper so as to reduce the cost of manufacture by per- 
mitting the use of cheaper materials, such as the substitution of wood pulp 
for rag fiber now required by the Government specifications. Mr. Moses fur- 
ther stated that his mil] would be perfectly willing to show its cost of manu- 
facture to any accountant that the committee might designate. 

Mr. Thomson stated that, in addition to the increased cost of raw materials, 
his mill has to face a large increase in labor cost, owing to the establishment 
of the three-tour system, which, he claimed, had of itself increased wages prac- 
tically 50 per cent by payment of the same wage for 8 hours' work that 
had heretofore been paid for 12 hours' work. In addition to the three-tour 
system, Mr. Thomson stated that his mill had been required to make other 
increases in the wages paid its employees. 

Mr. Andrews stated that he represented about 10 mills, and that while he 
had not received any special complaint from these mills, he desired to submit 
one complaint as to the specifications for paper. He suggested that in certain 
instances the specifications be modified so as to permit the use of ground wood 
pulp in certain classes of bristol board, asserting that there was no commercial 
difference between bristol board containing 25 per cent of ground wood and 
bristol board made without ground wood. 

Mr. Knickerbocker stated that his company was interested in Government 
contracts this year in only a small way, and that it would stand to lose about 
$3,000 if required to carry out existing contracts. He suggested a modification 
in the specifications affecting his company so as to permit the substitution of 
bleached- sulphite pulp for rag stock. Mr. Knickerbocker said he had been 
advised that the scarcity of rags was due in part to their use by the Du Pont 
Co. in the manufacture of explosives, and to the increasing demand for rags 
in the manufacture of moving-picture films. He also offered to show the mill 
costs to the committee if desired. 

The chairman requested Mr. Moses and the paper bidders accompanying him 
to submit a brief to the committee showing the condition of the paper market 
and suggesting such relief as may be desired by them. He further stated that 
the matter would then be taken "up by the committee and probably submitted 
to the Attorney General for an opinion as to the authority of the committee 
to modify the existing paper contracts. After having received such an opinion 
the committee would then consider, if authorized to do so, the advisability of 

70929—16 2 



18 INVESTIGATION OF PAPER PRICES. 

making changes in the contracts or specifications to meet the situation sub- 
mitted by the contractors. 

The chairman advised the committee that he had also received a letter from 
the Aetna Paper Co., of Dayton, Ohio, under date of May 15, 1916, requesting 
some modifications in its contracts to furnish writing and bond papers to the 
Government Printing Office, and also a letter from Cornelius Kahlen, of New 
York, under date of May 16, 1916, requesting permission to supply onionskin 
paper ordered under contract for 1915-16 at an increase from 24 cents, con- 
tract price, to 33 cents per pound. 



EXHIBIT C. 

Stkathmore Paper Co., 
Mittineague, Mass., May 19, 1916. 
Hon. Duncan U. Fletcher, 

Chairman Joint Committee on Printing, Washington, D. C. 
Dear Sir : Complying with your request at the hearing yesterday we will 
suggest that you allow us to make the following changes in our contracts : 

On our contracts for items of book paper Nos. 24 and 28, instead of using 
75 per cent rag you allow us to use 50 per cent rag and 50 per cent pulp. 

On our contracts for bond papers, items Nos. 90, 91, and 93, calling for 100 
per cent rag, you allow us to use 25 per cent pulp and leave out the water- 
mark. By eliminating the latter, which is difficult to run, we can make 
larger product, and by substituting 25 per cent pulp it would make no depre- 
ciable difference in the quality of the paper. 

On the book paper, by substituting 25 per cent pulp, we feel that it will not 
materially affect the quality of the paper. 

We should be glad to make one shipment under these formulas with these 
changes to submit for approval. 

As we have considerable large orders on hand the matter is very important 
to us, as we will be under a big loss, and Ave trust you will be able to render 
prompt decison. 

Yours, very truly, 

Strathmore Paper Co., 
H. A. Moses, President. 



EXHIBIT D. 

The Champion Coated Paper Co., 

Hamilton, Ohio, March llf, 1916. 
Hon. Duncan U. Fletcher, 

Chairman Joint Committee on Printing, 

Washington, D. C. 
Dear Sir : We confirm our night letter to you as follows : 
" Most unprecedented advances in prices of all materials and supplies since 
we bid on paper for Public Printer prevent our fulfilling contracts without large 
loss. We respectfully request that prices be increased on all our contracts to 
cover extra costs since we bid ; prices to be reduced to contract prices when 
costs are reduced to those at time of bid." 
Respectfully, 

The Champion Coated Px\per Company, 
P. G. Thomson, V. P., . 
Per R. 



The Champion Coated Paper Co.. 

Hamilton, Ohio, March 1!,, 1916. 
Hon. Duncan U. Fletcher, 

Chairman Committee on Printing, 

Washington, D. C. 
Dear Sir : We confirm our night letter to you, same reading as follows : 
" We have contracts paper with Public Printer requiring various percentages 
rags, and to-day received orders for same. We find it impossible secure rags 



INVESTIGATION OP PAPER PRICES. 19 

account manufacturers explosives having offered rag dealers premium over 
anything paper makers offer, and we request we be permitted substitute 
bleached chemical pulp for rags on all orders until conditions change." 
Respectfully, 

The Champion Coated Paper Co., 
,. P. G. Thomson, V. P., 

Per R. 



The Champion Coated Paper Co., 

Hamilton, Ohio, March 18, 1916. 
Joint Committee on Printing, 

Washington, D. C. 
Attention Hon. W. E. Chilton, acting chairman. 

Gentlemen : We have your letter of the 15th in reply to our request of the 
13th asking you to permit us to substitute bleached chemical pulp for rags on 
orders which we have received from the Public Printer requiring various per- 
centages of rag. 

We note that you have decided to instruct the Public Printer to require that 
we furnish the specified quantities of rag stock on the orders which he has 
sent us and also on future orders. We regret that it is impossible for us to do 
this, as we have found it almost impossible to secure rags for completing the 
orders requiring rags on our last year's contract, expired March 1. 

We have found it impossible to purchase rags to fill the orders now received 
from the Public Printer on the contract which begins March 1, and are advised 
that the only mills which can furnish any rag stock are those which happen 
to have large warehouses full of rags which were purchased before the present 
conditions of the market. Not only has an emborgo been placed on the export 
of rags from both France and Great Britain, but we are advised the manufac- 
ture of explosives have offered rag dealers a premium over anything which 
paper makers will offer them. Under these circumstances you can understand 
that an enforcement of the contract makes it absolutely impossible for us to 
fill the orders. 

We therefore ask for your consideration in this matter and that you permit 
us to fill the orders with bleached chemical pulp, and even if this is permitted, 
owing to the present price of bleached chemical pulp, it will mean that we are 
obliged to fill the orders at a very large loss. 
Respectfully, 

The Champion Coated Paper Company, 
Peter G. Thomson, Jr., V. P., 
Per E. S. 



The Champion Coated Paper Co., 

Hamilton, Ohio, April 3, 1916. 
Joint Committee on Printing, 

Washington, D. C. 
Gentlemen : We respectfully confirm our night letter to you of this date, as 
follows : 

" Public Printer desires information regarding orders for paper requiring 
large quantities rags. Have found it impossible secure rags of proper quality, 
although have made house-to-house canvas for rags with motor trucks, and 
paper made from rags obtained not of satisfactory quality. Can fill orders 
by substituting bleached pulp at large loss, as have been compelled pay large 
advances pulp and all supplies and almost 50 per cent advance in labor. We 
respectfully request your immediate permission use bleached pulp instead 
rags and your future consideration of paying advanced prices on all items 
contracted.' - 

Respectfully, 

The Champion Coated Paper Co., 
Peter G. Thomson, Jr., 

Vice President. 



20 INVESTIGATION OF PAPER PRICES. 

The Champion ' Coated Paper Co., 

Hamilton, Ohio, May 28, 1916. 
Hon. Duncan U. Fletcher, 

Chairman Joint Committee on Printing, 

Washington, D. C. 

Dear Sir : We confirm our night letter, as follows : 

" The Public Printer desires quick shipment orders requiring rags. Can only 
make quick shipment by making these orders entirely of bleached pulp. Please 
advise us if can make all orders requiring rags with bleached pulp, of which 
there is greatest scarcity. Also advise can we use high-grade unbleached 
sulphite in all other orders requiring bleached pulp, otherwise impossible 
meet demands of Public Printer in specifications. Would still mean tre- 
mendous losses to us in filling orders for the specified quantities upon which 
we bid, and any increase in price to partially cover excessive advances in mate- 
rials and labor would be greatly appreciated." 
Respectfully,. 

The Champion Coated Paper Co., 
P. G. Thomson, Jr., 

Vice President. 



EXHIBIT E. 

Opinion of the Attorney General. 

Office of the' Attorney General, 

Washington, D. C, June 13, 1916. 

Sir : I have the honor to refer to your letter of April 14, 1916, and its in- 
closures and, in compliance with your oral request therefor of June 9, 1916, to 
submit a formal opinion on the questions developed from that letter, as 
follows : 

(1) Whether the contractor, under the contract for public printing supplies 
hereinafter described, is bound to deliver to the extent of the needs of the 
Government during the contract period; (2) whether the Government may 
enter into a new contract for such paper beyond the quantity specifically 
named in the original contract; and (3) whether the Government, under 
language such as is found in this contract, would be required to purchase 
the whole specified quantity, though such quantity was in excess of its needs. 

I am of the opinion — 

(1) The contract in question was within the power of the Joint Committee 
on Printing and obligated the contractor to furnish the paper described to 
the limit of the Government's needs during the life of the contract. 

(2) The Government has no right to enter into a new contract for any part 
of the supply covered by the old contract save as provided in the old contract 
itself ; and 

(3) The Government can not be compelled to take more than its needs, 
though that need is less than the amount specified in the schedule or estimates. 

The questions arise on the following statutes and facts : 

The so-called printing act of January 12, 1895 (28 Stat., 601), among other 
things, provides : 

" Sec. 26. The Public Printer shall, at the beginning of each session of Con- 
gress, submit to the Joint Committee on Printing estimates of the quantity of 
paper of all descriptions which will be required, * * * etc. 

" Sec 3. The Public Printer shall, under their (Printing Committee's) direc- 
tion, advertise * * * for sealed proposals to furnish * * * paper as 
specified in the schedule to be furnished to applicants by the Public Printer, 
setting forth in detail the quality and quantities required for the public 
printing. 

" Sec 4. The advertisement shall specify the minimum portions of each 
quality of paper required * * * but when the minimum portion as speci- 
fied in any case exceeds in amount one thousand reams it shall state that pro- 
posals will be received for one thousand reams or more. 

" Sec 5. * * * they shall not consider any proposal * * * not ac- 
companied by a bond * * * that the bidder * * * if his * * * pro- 
posal is accepted, shall enter into a contract to furnish the articles proposed 
for, * * * etc" 



INVESTIGATION OF PAPER PRICES. 21 

The procedure in this case was as follows : 

On January 31, 1916, an advertisement was published naming no minimum, 
as such, but reading — 

'" Contracts will be entered into for supplying the quantities required, whether 
more or less than the estimates, for a period of six months of one year, com- 
mencing March 1, 1916. * * * The approximate estimated quantities 

* * * set forth in detail in the schedule comprise : 305,000 pounds news print 
paper. * * * Blank proposals containing the instructions schedule and 
specifications * * * may be obtained by addressing, * * * The Public 
Printer, Washington, D. 0. 

and further stating " award of contracts " to be made to the lowest and best 
bidder whose bids are " in conformity with the requirements of the proposals." 
The blank forms of proposals furnished intending bidders, and which was 
filled in and returned by the Republic Bag & Paper Co. as its bid and proposal, 
stated — 

" The undersigned * * * hereby propose to supply the Goverment of 
the United States with so much of the paper, more or less, embraced in the 
following schedule, as may be required for the public printing and binding, 
from March 1, 1916, to February 28, 1917. or for a period of six months from 
March 1, 1916, * * * etc." 

and under the heading " Instructions," provided — 

" Quantity and quality. — The subjoined schedule specifies the quantity as 
nearly as can be estimated, but the contractor must furnish the quantity 
which may be needed, whether more or less than the estimate * * *, 

" Contract. — * * * The successful bidders will be required to enter into 
a contract to furnish the quantity required, whether more or less than the esti- 
mates, * * * etc. 

" Delivery. — * * * Satisfactory delivery must be made within 30 days 

* * * after receipt of an order." 

Under the heading " Schedule," appeared : " Printing paper, white news print, 
lots 1 and 2, specifications * * * 300,000. pounds * * * six months." 
And opposite this entry appeared the figures " 3$," inserted by the Republic 
Bag & Paper Co. 

The bond accompanying the proposal as executed by the bag company recited 
that it was " made and executed on the terms and conditions of the said ad- 
vertisement, instructions, schedule, and. specifications provided and prescribed 
to accompany the aforegoing and annexed proposal of the above bidder." 

The contract obligated the Republic Bag & Paper Co. to furnish all labor 
and material necessary to manufacture and deliver " so much of the estimated 
quantity as may be ordered * * * whether more or less than the estimates 
stated in the proposal * * * as more specifically set forth and described 
in the proposal containing the instructions, schedule, and specifications, 

* * * a copy of which * * * is hereto attached and made a part of 
this contract." 

The contract further provided for deliveries from time to time on partial 
orders, each specifying the quantity then desired. 

Under the heading " Extras," it was provided — 

"No claim for compensation for any additional or extra work or material 
(i. e., paper) shall be made by or allowed to (* * * the contractor 
***)*** except as specifically provided in the accompanying pro- 
posal form." 

There was in the proposal no provision for additional compensation save as 
implied from the above-quoted provisions requiring the furnishing of quantities, 
if needed, in excess of the schedule estimate. 

Under the heading " Default," it was, in that event, provided that the Govern- 
ment " shall procure such quantity, or quantities, of paper necessary for the 
public printing in the manner prescribed by sections 9 and 11 " of the Printing 
Act (supra). 

My reasons for my conclusions, first above stated, are: 

As to the power: The requirement of section 4 of the act, that the advertise- 
ment should state a minimum, was meant but to indicate to possible bidders 
what the proposals might involve in a general way. It also suggests somewhat, 
however, the idea of an unlimited maximum. 

The provision that the schedule to be furnished intending bidders shall set 
forth in detail the quality and quantities required for the public printing, does 



22 INVESTIGATION OF PAPER PRICES. 

not, in my judgment, limit the power to contract to a specific number of pounds 
to be guessed at in advance, regardless of the actual needs of the printing 
operation. It is complied with by the statement in the schedule that the 
quantity is estimated at a fix6d number of pounds, but the amount to be fur- 
nished will be less or more, controlled by the actual need during a named 
period. Such a statement is a " detail " of quantity. It is no wise uncertain 
in meaning, and is certain as may be, as to quantity. The maxim " Id certum 
est quod certum reddi potest " applies, in that the bidder knows that the oper- 
ation itself will determine the exact number of pounds he will be obliged to 
furnish, and that beyond its needs he can not be held. Of course, if it was 
intended to contract but for a part of the needed supply within a given period, 
the part probably could, and if so should, be stated. 

Section 3 shows that the purpose of the contract provided for is to secure the 
periodical supply " required for the public printing." Section 9 makes this even ■ 
plainer. It provides in case of failure to furnish the contract supply, for a 
reletting; and, pending the reletting, for a purchase in the open market of " all 
paper necessary for the public printing"; and further, for a liability on the 
bond for any increase of cost " in procuring a supply of such paper * * * 
consequent upon such default." 

If the language as to detail in the schedule were to be read as limiting the 
power to contract, to a contract for an exact number of pounds, to be specified 
in advance in the schedule, it would force the Government to guess at its future 
need and to take that exact number of pounds though its need turned out to 
be far less ; or, on the other hand, it would prohibit it from arranging for more 
than the named number of pounds, though its need should turn out to be far 
greater. Thus it would be driven to emergency purchase at advanced prices 
in the open market under section 11, because of a lack of power to deal in 
advance with a known condition; i. e., fluctuation of quantity needed for oper- 
ating purposes. 

As to the obligation of the contract : Because the entire " proposal," including 
the attached instructions, schedule, specifications, etc, is expressly " made a 
part of this contract " the language in each must be harmonized if possible. 

In Dermott v. Jones (2 Wall., 7) the court said: "The specifications and the 
instrument to which they are attached constitute the contract. They make a 
common context and must be construed together." 

The language in the proposal, specifications, schedule, and bond, extending or 
restricting the amount to the actual operating needs of the period, is so plain 
as to be self-interpreting. Unless, therefore, the contract has narrowed these 
conditions the duty to furnish according to the needs is clear. 

The restrictive contention can be based only on the contract words " so much 
of the estimated quantity as may be ordered " as limiting the obligation to 
furnish within the estimated poundage as a maximum. Such a reading is, in 
the present case, neither necessary nor proper. First, it would oppose the plain 
language of other parts of the contract ; i. e., the proposal and its accompanying 
papers. This may not be done if any other reasonable reading be possible. 
Second, it would oppose the plain purpose of the act with regard to the con- 
tract; namely, the procurement by competitive bidding of a periodical supply of 
all paper necessary for the public printing. This feature has been considered 
above. Third, as repeated partial orders were contemplated, the language was 
framed with this in mind and obligated the Republic Bag & Paper Oo. to 
deliver " so much " as each order might call for. The words " of the estimated 
quantity " are controlled and limited by the following language, namely, 
" whether more or less than the estimates stated in the proposal," and the 
further following words — " as more specifically set forth and described in the 
proposal containing the instructions, schedule, and specifications * * *, a 
copy of which is hereto attached and made a part of this contract." 

In other words, the " estimated quantity " to be furnished would be more or 
less than the number of pounds named in the 3-cent bid, according as the needs 
of the printing operation during the named six-month period might increase 
or decrease that poundage. 

The wording of the contract might have been more apt and in future con- 
tracts it should be made as clear in this respect as the language in the instruc- 
tions, specifications, and proposals; but support for the view that this is the 
proper reading of the present contract is found in the case of Brawley v. United 
States (96 U. S., 168, 172, 173), wherein it is said: 

" If, however, the qualifying words are supplemented by other stipulations or 
conditions which give them a broader scope or a more extensive significancy, 



INVESTIGATION OF PAPER PRICES. 23 

then the contract is to be governed by such added stipulations or conditions. 
'As, if it be agreed to furnish so many bushels of wheat, more or less, according 
to what the party receiving it shall require for the use of his mill, then the 
contract is not governed by the quantity named, nor by that quantity with 
slight and unimportant variations, but by what the receiving party shall re- 
quire for the use of his mill ; and the variation from the quantity named will 
depend upon his discretion and requirements, so long as he acts in good 
faith (172). 

" * * * The contract was not for the delivery of any particular lot or any 
particular quantity, but to deliver at the post of Fort Pembina eight hundred 
and eighty cords of wood, ' more or less, as shall be determined to be necessary 
by the post commander for the regular supply, in accordance with Army Regu- 
lations, of the troops and employees of the garrison of said post, for the fiscal 
year beginning July 1, 1871.' These are determinative words of the contract, 
and the quantity designated — eight hundred and eighty cords — is to be re- 
garded merely as an estimate of what the officer making the contract at the 
time supposed might be required. The substantial engagement was to furnish 
what should be determined to be necessary by the post commander for the regu- 
lar supply for the year, in accordance with Army Regulations." 

As to the right to newly contract : As the Republic Bag & Paper Co. stands 
obligated to supply all the news print paper needed for the printing operation 
during the contract six-months period, no new contract should be made with it 
for any part of that supply. It should be forced to fill the existing contract or 
put in default thereunder. To put it in default, a delivery order under the con- 
tract should be given it. If not complied with, the paper company should be 
notified that it has thereby breached its obligation and put itself in default, 
and thereafter proceedings for' securing another supply and for lodging respon- 
sibility for the ensuing damages should be had under the default paragraph of 
the contract and also under sections 9, 10, and 11 of the Printing Act. 

A$ to the right to take less than the minimum named : The third question, 
for reasons already set forth, has been answered in the affirmative. The mini- 
mum is but an estimate; the actual need controls, whether less than or more 
than the minimum specified in the schedule. 
Respectfully, 

(Signed) T. W. Gregory, Attorney General. 

To the President. 



REPLY FROM THE CHAIRMAN OF THE FEDERAL TRADE 
COMMISSION. 

Federal Trade Commission, 

Washington, September 16, 1916. 
Hon. Duncan IT. Fletcher, 

United States Senate, Washington, D. C. 
My Dear Senator: Your very interesting letter of September 13, dealing 
with Senate resolution No. 269 and inviting my attention to the remarks on 
pages 16416-16417 of the Congressional Record of September 7, 1916, is re- 
ceived. I have read same over carefully. 

I will bring your letter before the entire commission at the first opportunity. 
As you know, we are investigating the news-print paper situation, and we 
hope to have our report ready within the next month or so. This investigation 
was started pursuant to a resolution introduced by Senator Owen, and you 
may be interested in knowing that up to the present time we have expended 
on this particular piece of work approximately $15,000. 

In order- for the commission to undertake an investigation of the prices of 
all grades of printing paper, in accordance with your resolution, it is only fair 
to say that we will need an additional appropriation, as we will require all of 
our present funds to complete the various investigations now under way. 

However, as above indicated, when the commission returns, early in October, 
I will be pleased to present the matter to it and then give you an approximate 
estimate of the cost of conducting such an investigation as your resolution 
evidently contemplates. 
Very truly, yours, 

Edward N. Hurley, Chairman. 



CORRESPONDENCE WITH THE PUBLIC PRINTER. 



Congress of the United States, 

Joint Committee on Printing, 
Washington, September 13, 1916. 
The Public Printer, 

Government Printing Office. 

Dear Sir: Replying further to your letter of September 7, 1916, 
stating that the paper situation in the Government Printing Office " is 
imperative enough to request that some action be taken whereby the 
Government will be enabled to purchase paper for the public print- 
ing and binding work at a reasonable price," I desire to call your 
attention to the resolution (S. Res. 269) which was adopted by the 
Senate on my motion September 7, 1916, and to the remarks which 
I made in the Senate on offering the resolution (Cong. Rec, pp. 
16416-17). 

In connection with this resolution I would respectfully suggest 
that you submit to the Federal Trade Commission at as early a date 
as practicable, such information as 3^our office may have concerning 
the difficulty you have had in getting manufacturers and jobbers to 
submit quotations on paper for the public printing and binding and 
the excessive prices that have been demanded for such paper. The 
purpose of the resolution is to determine whether the Government 
has been discriminated against by manufacturers in the furnishing 
of paper for the public printing and binding. Any evidence that 
you may have in this connection will, I am sure, be appreciated by 
the Trade Commission. 

In view of the situation of the past several months and the state- 
ments made in your letter of the 7th, there seemed to be no other 
course open than to request a full investigation of the matter by the 
Federal Trade Commission. Your hearty cooperation with that 
commission in its investigation will, I am sure, be to the best inter- 
ests of the Government. 



Respectfully, 



Duncan U. Fletcher, 

Chairman. 



Office of the Public Printer, 
Washington, September 16, 1916. 
Sir : I have the honor to acknowledge receipt of your communica- 
tion of September 13, 1916, inclosing copy of Senate resolution No. 
269, relating to investigation by the Federal Trade Commission con- 
cerning paper for public printing and binding work. 

In accordance with your request I am pleased to advise that I 
will be glad to cooperate with the Federal Trade Commission in 
24 



INVESTIGATION OF PAPER PRICES. 25 

every manner possible, and will furnish them with any information 
available at this office. 
Respectfully, 

Cornelius Ford, 

Public Printer. 
Chairman Joint Committee on Printing, 

United States Senate, Washington, D. C. 



Office of the Public Printer, 

Washington, October 12, 1916. 
Sir: With reference to the authority granted under date of Sep- 
tember 7, 1916, for the purchase of machine-finish book paper at a 
price not exceeding $0.11 per pound as in my judgment would be 
for the best interests of the Government, I am pleased to advise that 
instead of purchasing the paper at the price above named I have 
been able to negotiate for it at $0.08 per pound, which resulted in a 
saving of over $11,000 to the Government. 

I trust this information and action will meet with your hearty 
approval. 

Respectfully, 

Cornelius Ford, 

Public Printer. 
Chairman Joint Committee on Printing, 

United States Senate, Washington, D. G. 



Congress of the United States, 

Joint Committee on Printing, 

Washington, October 14, 1916. 
The Public Printer, 

Government Printing Office. 
Dear Sir: I am pleased to acknowledge receipt of your letter of 
the 12th advising me that your Office has been able to purchase ma- 
chine-finish book paper at 8 cents per pound instead of 11 cents per 
pound, as previously authorized, thereby effecting a saving of more 
than $11,000 to the Government. 

This saving is very gratifying and I desire to congratulate you 
upon rendering such good service to the Government. I am sure 
that your action meets with the hearty approval of the committee. 

It seems to me that the resolution adopted by the Senate on my 
motion of September 7, 1916, directing the Federal Trade Commis- 
sion to investigate the increase in the prices of paper, must have had 
some influence in bringing about this reduction in the price of paper 
for the Government Printing Office. If the resolution has assisted 
in part in effecting this saving I do not believe that its adoption 
has been in vain even if no other good results therefrom. I am very 
hopeful, however, that the investigation will be of material advan- 
tage to the Government. 

Very respectfully, yours, 

Duncan U. Fletcher, 

Chairman. 

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